When Venezuelan President Nicolas Maduro announced that his country would be issuing a crpytocurrency called the petro, many greeted the news with more than a little skepticism. That December announcement suggested that the new currency would be backed by the country’s oil reserves and other hard assets. On Thursday, information Minister Jorge Rodriguez confirmed that the petro will launch within days.
In a press conference, Rodriguez told reporters:
"Camp one of the Ayacucho block will form the initial backing of this cryptocurrency. It contains 5.342 billion certified barrels of oil. We're talking about backing of $US267 billion.”
The minister suggested that this hard asset backing would make the petro different than most other digital currencies, and confirmed that mining operations had already been established. As Bloomberg reported on Thursday, that $267 billion of hard asset backing is more than Bitcoin's $246 billion market capitalization.
The Venezuelan government has found itself increasingly isolated in recent months, as countries like the United States have responded unfavorably to Maduro’s harsh treatment of political opponents. The current U.S. administration has accused Venezuela’s leaders of rampant corruption and human rights abuses.
The socialist country has been in the midst of an ever-deepening financial crisis, as its currency has collapsed in value in recent years. The country has also experienced major difficulties servicing its debt, which has led many of its trading partners to suspend or delay further trading transactions. That has helped to exacerbate a growing humanitarian crisis throughout the country.
The Maduro government is hoping that the petro can help it to overcome what its leaders refer to as a “financial blockade” and provide a means to repay some of its creditors.